Capital Blu Management Brokers

Date:

December 19, 2014

Type of alert:

Fraud  

Capital Blu Management brokers Donovan Davis Jr., Damon Bromfield, and Blayne Davis are accused of fraud. According to a release by the U.S. Commodity Futures Trading Commission, in August 2007, Davis and Broomfield recruited investors to put $17 million into a CBM FX Fund. In January 2008, the CBM FX Fund lost approximately $1.8 million. However, Capital Blu never reported the loss. Donovan Davis ordered Capital Blu’s Controller to report a 1.6 percent gain. Later on, Donovan Davis Jr, along with Bromfield and Blayne Davis, organized a strategy to put the lost funds back into the CBM FX Fund. The plan also included raising additional funds from new investors by trading aggressively and falsifying statements. Also, Capital Blu used money from the CBM FX Fund toward the operating expenses, which included purchasing a private jet and paying their own salaries. Capital Blu Management was shut down in September 2008 after a surprise audit by the National Futures Association. It was later discovered that the CBM FX Fund had $5.4 million in trading losses and $2.46 million was misappropriated.

In June 2011, Broomfield, Donovan Davis Jr, and Blayne Davis were each ordered to pay a civil monetary penalty of $4,927,184.24.

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